www.uni-goettingen.de/globalfood
RTG 1666 GlobalFood
Transformation of Global Agri-Food Systems: Trends, Driving Forces, and Implications for Developing Countries
Georg-August-University of Göttingen
GlobalFood Discussion Papers
No. 43
Market discrimination, market participation and control over revenue: A gendered analysis of Cameroon’s cocoa producers
Debosree Banerjee Stephan Klasen Meike Wollni
August 2014
RTG 1666 GlobalFood ⋅ Heinrich Düker Weg 12 ⋅ 37073 Göttingen ⋅ Germany www.uni-goettingen.de/globalfood
ISSN (2192-3248)
Market discrimination, market participation and control over revenue: A gendered analysis of Cameroon’s cocoa producers
Debosree Banerjee, Stephan Klasen, Meike Wollni1
University of Göttingen
Abstract
Using micro level data from Cameroon this paper applies the theories of intrahousehold bargaining to models in which female farmers decide whether to take up cocoa marketing on their own or to rely on others to sell the product. We analyze the effect of marketing on control over the proceeds. We find that controlling both production and marketing provides higher bargaining power over proceeds compared to a situation in which the farmer participates only in production and delegate the task of marketing to another family member. Our data also indicate that in the cocoa sector of Cameroon, female farmers’ market participation is hindered by existing price discrimination, which in turn reduces their intrahousehold bargaining power. In other words, participating female farmers receive much lower prices for their produce than participating males. To generate higher revenue, female farmers hand over the marketing responsibility to a male in the family. Such non-participation results in lower control over the proceeds by the female farmer, as the individual doing the marketing can now claim a higher share in the revenue. Additionally we find that collective marketing contributes to eliminating price discrimination and promoting female market participation and thus their control over proceeds.
Keywords: Cocoa Marketing; Gender, Price Discrimination, Control over Revenue JEL Code: D11, Q12, Q13
Acknowledgements: We thank the German Research Foundation (DFG) for financial support for this research.
1 Banerjee: RTG GlobalFood, University of Göttingen, Germany, [email protected]; Klasen: Department of Development Economics, University of Göttingen, Germany, sklasen@uni- goettingen.de; Wollni: Department of Agricultural Economics and Rural Development, University of Göttingen, Germany, [email protected]. We would like to thank Wokia Kumase for providing us the data and all the background information on cocoa producing farmers in Cameroon. We also thank Marcela Ibanez, all participants of GlobalFood Research colloquium and GlobalFood symposium, 2014 for valuable discussion and comments.
1. Introduction A fundamental issue in microeconomics with particular relevance to developing countries is how to model household behavior when systematic differences in preferences exist. Undoubtedly household decisions, such as who works for how many hours, how to generate income, and who receives how much of the household resources, are the outcome of intrahousehold decision making and have crucial implications for individual welfare. It has been shown that household members with higher bargaining power have more influence on decision making than members with less bargaining power (e.g. Sen, 1990; Thomas 1997, World Bank 2001, Klasen, 1998). Therefore, intrahousehold bargaining2 and associated intrahousehold outcomes have generated great interest among researchers and policy-makers concerned about the well-being of women and children, which is largely dependent on the outcome of this intrahousehold bargaining.
The empirical literature has confirmed that women with lower bargaining power tend to have less access to household resources, such as resources allocated to health, education and access to land, than their male counterparts (Thorsten, 2002; Udry et al, 1995; Chiappori, 1988, 1992; Browning & Chiappori, 1998; Klasen, 1998). Second, causal association between bargaining and household decision-making in the allocation of resources flows both ways. Unequal access to resources affects bargaining and then lower bargaining power causes lesser access to household resources (Basu, 2006). Therefore, persistence of a gender gap in intrahousehold bargaining could be attributed to gender gaps in access to any income generating activities or access to assets and unearned incomes (Rocheleau & Edmunds 1997; Rose & Hartmann 2004, Thomas, 1997). Furthermore, such differences tend to be even stronger in rural economies where family and community norms regarding the accumulation and transmission of wealth are important to determine the within-household wealth allocation, which in turn affects the bargaining power of male and female household members. Under these customary norms in many rural settings in developing countries, production systems favor male over their female counterparts in terms of access to productive resources, such as
2Intrahousehold bargaining models are typically modeled within a cooperative bargaining framework. A typical cooperative bargaining model of marriage starts with a family consisting of only two members: a husband and a wife. Individual agents, whose utility depends on their consumption of a private good, bargain with each other and depending on their relative bargaining strength, family demand is determined. If agreement is not reached between spouses, then the payoff received is represented by the utilities associated with divorce or a non-cooperative equilibrium within marriage, which are often known ‘threat points’; as a result, bargaining outcomes within marriage depend on this threat point as this circumscribes the bargaining solution (Manser-Brown, 1980 and McElroy-Horney, 1981, 1990, Chiappori, 1992 and Browning & Chiappori, 1998). Recent empirical tests of predictions of household models have strongly supported the role of bargaining power for household decisions, while debates continue whether the outcome of bargaining is pareto efficient or not (e.g. Browning and Chiappori, 1998; Haddad, Hoddinott, and Alderman, 1997). land, which then translates into lower productivity and income levels for female-headed farm units (FAO, 2011; Quisumbing & Pandolfelli, 2010; World Bank, FAO, & IFAD, 2009).
While unequal access to productive resources has well been discussed in the literature to address the gender gap in agricultural productivity and income (Udry, 1996; Fletschner, 2009, Zwarteveen, 1996), research on inequalities arising in the post-harvest period is relatively rare. Factors, such as information asymmetry (Fletschner & Mesbah, 2011, Chowdury, 2006; Ngimwa et al., 1997), incomplete integration of farmers in high-value production and marketing chains could potentially affect farmers’ intrahousehold bargaining by reducing the opportunities of better market access and higher income. So even if women have access to assets and control production, if they do not control the marketing of output, they may still have little control over the proceeds and thus lower household bargaining power. This could be particularly true for female farmers, who are typically less involved in commercialized farming due to lower adoption of new technologies, lower access to extension service, lower integration with marketing channels etc., which results in unequal market participation by them (e.g. Blackden & Bhanu, 1999; Blackden et al. 2006; Kumase, Bisseleua & Klasen, 2010).
In our study we investigate female participation in commercialization of agricultural product and examine its impact on intrahousehold bargaining. The contribution of the study is threefold. Based on a survey with 911 male and female cocoa farmers in Cameroon, we first attempt to investigate the causes of unequal market participation by male and female farmers; second, we estimate the impact of market participation on intrahousehold bargaining; and third, we also explore the role of collective marketing in improving female market participation. Specific hypotheses that we examine are (1) market participation by female farmers is positively associated with collective marketing but negatively influenced by gender-based price discrimination in output markets (2) market participation affects control over cocoa revenue positively, where control over revenue is measured by the proportion of revenue controlled by the farmers individually.
Given that unobserved factors that explain female participation in marketing activities can be correlated with control over proceeds, simple OLS estimations would lead to biased results. We address this problem by linking the hypotheses above. In particular, our estimation uses the presence of collective marketing institutions (and male participation in these channels) as instruments for female market participation. Cameroon’s cocoa production provides us with a unique platform to address the research objective as, unlike in Asia, in many Sub-Saharan African countries, such as in Cameroon, agricultural production is often managed and controlled by male and female farmers separately. Decision-making authority with respect to the cultivation on these plots rests with individual household members; cultivation expenses are paid by the individual; and output from the plot is attributed to that individual (Duflo & Udry 2004, Kumase, Bisseleua & Klasen, 2010). This enables us to investigate marketing activities and resulting income inequalities by gender of the farmer.
Our data shows that although female farmers manage cultivation individually, marketing of cocoa mostly rests in the hands of the men. In contrast, male farmers usually control both the production as well as the marketing of cocoa. An important point to note here is that for (mostly female) farmers who do not participate in marketing, our data show that the task is then mainly carried out by another (typically male) family member. We also find that one of the plausible factors that could explain the lower market participation by female farmers is price discrimination. In particular, female farmers who market their cocoa receive significantly lower prices than their male counterparts. Consequently, revenue received by participating women is much lower than by participating men indicating that income opportunities are higher if a man takes over the marketing task. In our research area, we therefore find a large number of women relying on male members of the family for marketing their produce. While this strategy leads to higher revenues for the household, we find that it lowers the share of resources controlled by women compared to the situation where female farmers carry out the marketing themselves. Finally, our estimation shows that villages with better access to collective marketing could bring down the gender disparity in market participation by lowering the existing price discrimination. In particular, if male farmers increase their participation in collective marketing, the price received is uniform across all group members, thus removing the gender gap in prices, which in turn encourages female farmers to take part in the marketing and improves their control over proceeds.
The paper is organized as follows. Section 2 provides a brief description of the study context and discusses the data; section 3 provides a description of the estimation strategy; section 4 discusses the results; and section 5 concludes the paper. 2. Study context
2.1. The cocoa market in Cameroon The organization of cocoa marketing in Cameroon is characterized by the interactions between licensed buyers, buying agents3, Common Initiative Groups (CIGs)4 (who often present themselves as producers’ organizations) and producers’ organizations (PO)5. Activity wise the POs and CIGs do not differ much from each other. They are different to some extent with respect to their funding sources. Licensed buyers are mostly based in the cities and buy cocoa in large quantities. They purchase either directly from farmers or rely on buying agents, who collect cocoa from large numbers of smallholder farmers. Buying agents often have long- standing relationships with farmers and offer them pre-harvest financing for input purchases. At harvest, they collect cocoa at the farmgate and then resell it to the licensed buyers. Licensed buyers transport the cocoa in large quantities to the buying centers, where it is sold to the exporters. Producers can market their cocoa either individually or collectively through POs and CIGs. Cocoa cultivation in Cameroon is a small-scale business with plantations ranging between two to five hectares. Most farmers are members of CIGs or POs, even if they market their cocoa individually. As members of such groups they can leverage the benefits of collective action, in terms of easier access to fertilizers and pesticides, regular contacts to government extension officers and exchange of knowledge, and better marketing opportunities and prices.
In case of collective marketing, these groups sign contracts with buyers, identify those members who have cocoa for sale, and then sell the total amount of cocoa collectively to the buyer. Thus, in the case of collective sales, CIGs and POs act as procurement organizations for buyers (Folefack & Gockowski, 2004; Gockowski, 2008). However, cocoa sales do not figure high on the priority list of all CIGs. Many CIGs instead focus on the protection of farmers’ rights, on the organization of extension visits to obtain information on new farming
3 Buying agents work for a licensed buyer and are paid on commission.
4After liberalization in 1994, the government withdrew all financial support and farmers found it difficult to procure fungicides and pesticides from private suppliers and as a result many of them started to look for alternative agricultural activities. Under such a scenario, the government and many non-governmental-organizations (NGOs) started to encourage cocoa farmers and traders to organize themselves in ‘common initiative groups’ (CIGs) to promote welfare through bulk marketing. The formation of CIGs helped to reduce transaction costs and as a result the prices paid to producers increased. In 1997, world cocoa prices started to recover from previous lows, thus bringing back many farmers to cocoa production (Dugum, Gockowski, Bakal, 2001).
5After liberalization, in the Centre region the former state cooperatives disappeared. POs primarily grew up with the support from development projects such as the Sustainable Tree Crop Program based at the IITA. According to Folefack & Gockowski (2004), 40% of the cocoa producers in the Centre are members of a PO. In the Southwest, the former cooperatives (such as the Southwest Farmer Cooperative Union based in Kumba) were placed in the hands of CIGs. In the absence of projects supporting producers’ initiatives, no POs have been able to emerge in the Southwest. techniques, and on the promotion of farmer-to-farmer assistance through the creation of farmers’ networks. However, most of the smallholders living in remote villages are not well connected with the market and lack sufficient knowledge about market prices. As a result, farmers can be exploited by buying agents who tend to behave opportunistically by offering lower prices than the market price. In addition, farmers often obtain input credit from buyers to purchase fertilizers and pesticides during the production phase, which is then deducted from their cocoa deliveries at harvest. Due to their repayment obligations, farmers also face a lower bargaining position vis-à-vis the buyer in such a situation. In this context, collective sales organized through CIGs can improve the farmers bargaining situation vis-à-vis buying agents and thus protect them from opportunistic behavior.
Hence, collective sell through the reduction of transaction costs not only facilitates better access to marketing channels, but it also secures access to new technologies, and allows farmers to tap into high value markets (Stockbridge, Doorward, Kydd, 2003). Additionally, there is evidence that collective action can help smallholders to reduce barriers to entry into markets by improving their bargaining power with buyers and intermediaries (Thorp, Stewart, Heyer, 2005; Kherallah et al., 2002).
2.2. Empirical data and descriptive statistics The empirical analysis is based on primary data, which was collected in six major cocoa producing subdivisions in Southwest and Center Cameroon, namely Ngomedzap, Boumyebel, Obala, Mbangassina, Bokito and Kumba (Kumase, Bisseleua, Klasen, 2010)6. The survey was conducted in October and November 2007 using a multi-stage random sampling approach. In the first stage, twelve communities were randomly selected within the six sub-divisions. Subsequently, within these twelve communities, 53 villages and 911 respondents were selected randomly. In total, 181 female farmers and 770 male farmers participated in the survey. All survey participants are members of Common Initiative Groups (CIGs). The villages are small (500 - 5000 inhabitants), yet, differ regarding their ethnic background and market orientation. Villages in Kumba and Mbangassina are mainly composed of migrants, who are more market-oriented and less concerned with land accumulation than their indigenous counterparts. Women in these communities are more engaged in commercial activities that require them to leave their homesteads. Villages in Bokito, Boumyebel, Ngomedzap and Obala are mainly composed of local people who are less market-oriented. Women in these communities are involved in small income-generating activities, but unlike
6 The survey in Kumase, Bisseleua, Klasen (2010) was generated with support from BMZ via GIZ. the women in Kumba and Mbangassina, they generally carry out their activities at home and generate considerably lower earnings.
Table1 presents descriptive statistics of individual characteristics by gender. Results show that while overall 78% of the farmers in our sample are married, marriage rates are significantly higher for male farmers. This is due to the fact that many female farmers are either widowed or single women, which is part of the reason that they control cocoa production. Nonetheless, a considerable share of female farmers in our sample is married (37%) and still controls cocoa production. Our data further suggest that female farmers are significantly less educated than male farmers: while 64% of men have completed primary education only 37% of women have done so. Moreover, our data confirm results found in other studies that women have substantially lower access to extension services. Interestingly, although significantly fewer women inherited the land they use, they hold more land titles than men. For many women in our sample, access to land has come as a result of land purchases, where titles are commonly awarded (Kumase, Bisseleua, Klasen, 2010).
With respect to cocoa marketing, we find that 40% of female farmers in our sample are not marketing their cocoa themselves, whereas only 4% of the male farmers delegate the marketing to somebody else. Similarly, the average price received by cocoa producers varies significantly across gender. On average, male farmers receive 811 CFA7 per kilogram of cocoa, whereas female farmers receive only 570 CFA. This provides some evidence that gender-related price discrimination exists in the Cameroonian cocoa market. Finally, control over income is measured as the share of the cocoa revenue controlled by the individual farmer. In the questionnaire, farmers were asked what proportion of the revenue they could dispose of. Results of a t-test on gender differences show that the average share of income controlled does not differ significantly between male and female farmers in our sample.
7 CFA is the currency of central and West Africa, which has been firmly linked to the French franc since 1948. Table 1: Descriptive statistics of individual characteristics by gender
Mean (sd) All Female Male t-stat Share of revenue controlled 0.46 0.47 0.45 -0.76 (0.23) (0.22) (0.23) Female 0.22 (0.41) Participation 0.88 0.61 0.96 16.10 (0.32) (0.49) (0.2) Extension service 0.42 0.28 0.46 5.04 (0.49) (0.45) (0.5) Age of plant ( months) 41.30 35.88 42.82 1.03 (2.78) (1.44) (3.53) Age 49.58 50.3 49.39 -0.94 (12.83) (10.97) (13.32) Household size 7.02 6.32 7.23 2.81 (4.32) (3.21) (4.57) Secondary and above 0.06 0.02 0.07 2.53 (0.23) (0.14) (0.25) Primary completed 0.58 0.37 0.64 7.35 (0.49) (0.48) (0.48) Less than primary 0.36 0.61 0.29 -8.88 (0.48) (0.49) (0.46) Married 0.78 0.37 0.89 19.18 (0.42) (0.48) (0.31) Land title 0.16 0.26 0.13 -4.42 (0.37) (0.44) (0.34) Non-farm activity 0.25 0.21 0.26 1.63 (0.43) (0.41) (0.44) Cocoa area 4.84 4.52 4.94 1.05 (5.19) (5.04) (5.24) Age of cocoa plant(months) 41.30 35.88 42.82 1.03 (2.78) (1.44) (3.53) Price 757.93 570.44 811.06 3.34 (30.02) (30.86) (37.30) Female to male average price ration in village0.92 (0.57) Marketing through CIG 0.27 0.23 0.28 1.43 (0.44) (0.42) (0.45)
Table2 reports the share of revenue controlled by market participation status and gender. We find that farmers, who market their cocoa, in general have slightly higher control over the proceeds from cocoa marketing; however, the difference between market participants and non-participants is not statistically significant. Yet, in the case of female farmers the control over revenue is significantly higher in the case of market participation. This indicates that for female farmers, market participation is positively associated with their intra-household bargaining power providing evidence in support of our hypothesis that market participation renders higher control over proceeds.
Table 2: Share of revenue controlled by market participation and gender All Participants Non- Participants – Non-participants t-stat All 0.46 0.46 0.44 0.02 1.08 (0.01) (0.02) (0.01) (0.02) Male 0.45 0.45 0.43 0.02 0.56 (0.01) (0.01) (0.03) (0.04) Female 0.47 0.48 0.44 0.04 1.64 (0.01) (0.02) (0.02) (0.03) Note: Standard errors are reported in the parentheses. Table3 presents further evidence on price discrimination in cocoa markets and how collective marketing relates to such discrimination.
Table 3: Prices received by gender Male Female t-stat All 811.06 570.44 3.34 (37.30) (30.86) Participants 813.82 526.51 3.13 (38.20) (15.00) Non-participants 760.66 624.74 0.75 (207.44) (77.69) t-stat 0.27 1.51 Selling through CIG 682.38 584.92 0.76 (60.2) (39.89) Not selling through CIG 862.7 556.48 3.43 ( 46.71) (40.05) t-stat 2.16 0.37 Participants selling through CIG 682.07 538.64 0.73 (61.26) ( 17.11) Participants not selling through CIG 867.64 522.02 3.27 (47.53) (17.68) Non-Participants, selling through CIG 699.44 620.03 0.41 (122.33) (68.77) Non-participants, not selling through CIG 770.29 624.79 0.6 (255.68) (114.34) Villages without male farmers selling through CIG* 1098.91 627.57 2.78 (82.71) (86.21) Villages with male farmers selling through CIG 644.23 542.65 1.63 (32.09) (17.77) Note: Standard errors are reported in the parentheses, *these are villages where either no farmer or only female farmers participate in collective marketing. In our sample, 34% of the villages reported no male participation in collective marketing, whereas 33% of the villages are without any collective marketing. Gender differences in received prices in villages where no farmer is involved in collective marketing are also highly significant (at less than 1%). The results allow us to make four distinct observations. First, irrespective of the marketing channel and farmers’ market participation status, female farmers receive significantly lower prices than male farmers on average. Second, price discrimination occurs when female farmers are doing their own marketing; if they rely on others to do the marketing; they receive better prices, but still not the prices that are as high as those of male participants. Compared to the few male non-participants, however, the price differences are insignificant. Third, such discrimination is absent in collective sales, even if the female farmer is choosing to participate in marketing; conversely, gender-specific price discrimination is largest in the case of individual marketing. Fourth, in regions where males do not participate in collective marketing, the gender gap in prices is significant whereas in regions where male do take part, this gap becomes insignificant.
3. Estimation strategy This section provides details on our estimation strategy identifying the determinants of market participation and the impact of market participation on control over cocoa proceeds. Hence we are interested in estimating the following model: